“Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things.  Our Gross National Product….. counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities..

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play.  It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.

It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

            Robert Kennedy 1968

 My challenge for the voluntary sector over the next decade is to find a new relationship with money. I don’t mean that money doesn’t matter at all in what we do, but I believe as a sector we have allowed it to dominate, distort and distract us from our greatest economic role – the creation of value beyond money.

Long before I ever entered an economics classroom my father taught me something about money. “Remember that money has no value in itself. It’s just something we invented to let us do things. It’s not for worshipping or stockpiling, you can’t eat it or read it. The only value it has is the value you place on what you could spend it on.” Paying a price for something you don’t like much will feel expensive, he went on to explain, but the same amount spent on something you treasure will feel like a bargain. Their price is the same but their value is different. Value is a feeling, not a fact. That week his insight helped me to choose between buying sweets or colouring pens, but it’s a perspective that has remained with me ever since.

In today’s society, where the price of one person’s designer handbag could pay six months’ rent for a whole family in the same country, surely we cannot doubt that the value of money is subjective, and relative to how much of it you have – a matter of personal judgment at the individual level, and political judgment at the collective level. When government is willing to give millions in guaranteed profit to giant private contracting companies and yet routinely casts voluntary sector grants as ‘handouts’ we should be in no doubt that their spending decisions are value judgments about their recipients.

Charities today are routinely compared with commercial business or public services. We should apparently be more like one or both of them, less like ourselves. Sometimes comparisons are favourable, sometimes not. More often they are just wholly inappropriate. More than half of England’s 60,000 children’s voluntary groups have no paid members of staff. Nine in ten support families in just one neighbourhood; few aim to expand in turnover or beyond their locality. They offer their communities many of the things in life that Bobby Kennedy referred to as the things that “make life worthwhile”, of which money, GDP, and claims of economic recovery take no account – fun, poetry, pride, sanctuary, solace, voice, confidence, integrity, freedom from loneliness. Most people actively involved in the voluntary sector feel it offers them personally, as well as their community, society and economy a kind of value beyond money, usually expressed in terms of their feelings. Yet to quantify what we’ve come to call our ‘added value’ we talk in pounds and pence – the money we raise, the hypothetical paid equivalent of volunteers’ time, the money we might be saving others by helping people in need. How did our sector come to be so defined, and yet so poorly described, by money instead of feelings?

For over 30 years, the competitive public marketplace has set one charity against another, pitted them against private and public competitors, and claimed to offer a level playing field to all, based on ability to deliver more [value] for less [money]. The industry of assessing ‘value for money’ offers the tantalizing fallacy that value is an objective measure, a neutral science that can be applied in spending the nation’s money without such undesirable or untrustworthy things as political ideology or personal judgments. Yet, this idea is itself an import from business and measuring the voluntary sector using the values framework of another has wrought havoc on its ecosystem, even for those uninterested or unable to bid for public contracts.

Looking forward, however, the contracting marketplace is rapidly looking like yesterday’s inadequate answer to tomorrow’s public spending problems. We have already started to see the advent of invitations to tender for public service contracts so underpriced for what’s being asked, so onerous in terms of transferred risk and liabilities, or so complex in terms of payment mechanisms, that nobody - neither voluntary nor private sector – is actually tendering for them. Dangling offers of money, and asking bidders to jump through costly hoops to get it, simply won’t continue to work if bidders feel there is more risk than value in taking the money on offer.

Voluntary agencies who are asked to subsidise contracts they bid for with their charitable assets, volunteer capacity and donor funds are now seeing some of their best known private sector competitors walk away mid-contract from public service delivery that is proving unprofitable, making clear (if there were any doubt) that they expect to take private profit from other public contracts they win. So the voluntary sector is being contracted to give, the private sector contracted to take. The level playing field is a sloping pitch. Charities who remain committed in future to offer their resources to support the state in the delivery of public services would be wise to argue for radically different terms, coming to the table as partners and investors in services alongside the public sector, rather than paying to be treated as interchangeable contractors.

Children England launched the Declaration of Interdependence earlier this year in the Financial Times, produced in partnership with the TUC and a wide range of voluntary sector bodies and trades unions, in the belief that both public and voluntary sectors must urgently move beyond price-driven contracting, stop fighting short term battles for our separate organisational interests, and pool our resources to build sustainable community services. With the first local authority joining its growing list of endorsements, it seems we are not alone in seeing the writing on the wall for ‘business as usual’ in the outsourcing and procurement of public services.

If we simply accept that the test of our worth is to do whatever it takes to survive in a financial Hunger Games, we sell ourselves short and devalue our currency. We have the capacity to act as a ‘currency converter’ between what the economist Edgar Cahn calls the ‘core economy’ of family, friendship and community, and the ‘cash economy’ where everyone and everything must be paid for. As a sector we can generate money out of economic thin air, out of people’s used books and clothes, their parties and performances, their sporting endeavours, their creative talents. We can turn the feelings that motivate their giving - love, solidarity, reciprocity, even anger and frustration - into hard assets in the cash economy with which we create jobs, pay taxes, and raise budgets that can add to the capacity of the public purse. But that currency conversion can’t happen if we operate like burger retailers competing for market share. No-one ever ran a marathon to raise funds to boost Burger King’s bottom line.

Currency conversion can work the other way too of course. When we do get cash from government we can use it to build and strengthen social currency in the core economy, to stimulate vast fabrics of human cooperation and creativity that no other sector could create for any amount of money. But that currency conversion can’t happen if we’re tied into contracts to engineer social outcomes that are so tightly specified and monitored that we morph into professional bureaucrats just to manage them.

To a cash economy up to its eyeballs in debt, and to politicians with tough value judgments ahead about how to spend public money, what our sector can do is nothing short of economic magic. If we’re smart we’ll stop selling ourselves on the basis of our competitive value for money. If they’re smart they’ll realise that what we can do is not just a bargain, it is priceless.

Kathy Evans

CEO Children England